quote:

Originally posted by Day_late:
From where I stand, it's not a good investment. Paid $61,500 in 1978, comparable houses in my neighborhood are selling for about $400,000. Compound annual growth rate over 40 years is about 4.8%. All that ignores the cost of financing (we paid ours off early a long time ago), taxes, maintenance, etc. I would like to sell our current two story house and buy a single level place - we're both in our 70s - but I suspect it would cost more than we're willing to pay.

When you say you paid $61,500 in 1978, do you mean you put that much cash out of pocket, or do you mean that was the purchase price of the home? If the latter, a more realistic way of looking at it would be calculate your return on investment based on the actual cash invested (the down payment).

You have to live somewhere, so you can either pay a mortgage payment, taxes, and maintenance or pay rent (and pay someone else's mortgage, taxes and maintenance).

i'd never buy a house to live in unless I thought it would be a good place to live AND it would be a good investmernt. I would have never been able to buy the 2nd house I owned unless I had purchased the first one. I would never have been able to purchase the third one if I had not purchased the second one and I would never have been able to buy the house I live in now and have well over $1MM in equity if I hadn't owned the third one. unconsious good luck of living in a time and place where real estate values went beserk didn't hurt. Always looking for good real estate.

quote:

Originally posted by grumpy1:
Absolutely not. While it is nice to see a home increase in value it is nothing compared to growth of stocks over time. Also with the new tax plan, the tax advantages of owning a home no longer exist for most of us. Those of us saddled with extremely high property taxes also tax another big hit on home ownership return costs. IMO one of the biggest mistakes many take is buying a home they can barely afford and thus neglecting other investments such as stocks to pay PI and taxes on their home.

I need to hear more about the stock thing works better than home ownership. Not the real numbers but close. East bay San Francisco, 1991 bought a $150,000 house, paid $30,000 down. Property taxes and interest all were tax deductable, including interest rates so low that after deductions it was practically free money. Monthly cost to me, even then was less than renting a similar house. Comps right now are selling for $700,000 and up. A married couple, so long as they have lived in the house 2 of the last 5 years does not pay any capitol gains tax on the first $500,000 of appreciation. So it sells for $700,000. Subtract from that that the $150,000 we paid, the $500,000 exemption and the $50,000 or so in sales cost , our original investment of $30,000 netted us tax free $650,000 . Right now a house in this neighborhood rents for maby $3000 a month, rent we dont pay. I think we were idiots for ever investing in our 457 and 401k defered comp programs. We are in a higher tax pracket now then we were when we were contributing to them. So, how do i make $650,000 tax free on a $30,000 stock investment that also provides a stable place to raise a family?

Some "investments" are better than others. My house is an investment as it goes on the "asset" side of the ledger along with my other investments, savings, etc. when calculating my net worth.

If I sell it and cash out, I can rent a condo or apartment for quite a few years. In fact, one strategy for later years in life is to sell your home and rent after you are retired. This gives you more flexibility to move to different locations at the end of every lease term and avoids sudden large expenses like replacing a furnace, air conditioner, roof etc.

Not sure I would do it, but not sure I wouldn't at least consider it.

quote:

Originally posted by james_1234:
According to the book "Rich Dad Poor Dad" no ones hone is an investment. The writer brings up some very interestingly info.

I read the book,he is right,house I BOUGHT IN 1965 is a money pit with t& i and maintance.
You never own it,government really owns you

I bought in 1999 for $160K. Assessed last year at $326K. Definitely a good investment.

I wonder what this thread would have looked like in 2009?

quote:

Originally posted by a1abdj:
As with most investments your profit is made when you buy, not when you sell.

I’m not sure I understand your statement. No matter how good a deal it was when you paid for it, you don’t realize a profit until you sell it. I could buy a home for half of what it’s worth today but until I actually sell I have not made any profit yet. It could theoretically be worth double but you don’t actually have a profit until you sell it for double, profit refers to returns on an investment and what returns do you have when you are still paying for it? If it’s a rental or you are using it for tax advantages I could see how you could make some gains from it but most people don’t do that.

quote:

Originally posted by Lunasee:
I bought in 1999 for $160K. Assessed last year at $326K. Definitely a good investment.

Assuming you can sell for that and the assessment is correct. The bad part in Texas with appreciation in home values is increased taxes throughout ownership. As the value goes up taxes go up too.

Buying a house is how you hopefully live rent free and if lucky, profit one day.

quote:

Originally posted by Oz_Shadow:
Buying a house is how you hopefully live rent free and if lucky, profit one day.

It’s normally never rent free. My house has been paid off for several year, there’s still taxes, insurance and upkeep to pay.

Not all that different from the stock market.

You have no control of either - you can only control when you buy and sell.

A strong market could take 6-7 years to build, and less than 6 months to go completely off the rails. (and vice versa)

quote:

Originally posted by mrvmax:

quote:

Originally posted by a1abdj:
As with most investments your profit is made when you buy, not when you sell.

I’m not sure I understand your statement. No matter how good a deal it was when you paid for it, you don’t realize a profit until you sell it. I could buy a home for half of what it’s worth today but until I actually sell I have not made any profit yet. It could theoretically be worth double but you don’t actually have a profit until you sell it for double, profit refers to returns on an investment and what returns do you have when you are still paying for it? If it’s a rental or you are using it for tax advantages I could see how you could make some gains from it but most people don’t do that.

when it comes to real estate, if you buy at the right price it is almost impossible to lose money. if you buy at the wrong price it is almost impossible to make money.

quote:

Originally posted by mrvmax:

quote:

Originally posted by Oz_Shadow:
Buying a house is how you hopefully live rent free and if lucky, profit one day.

It’s normally never rent free. My house has been paid off for several year, there’s still taxes, insurance and upkeep to pay.

You are correct, there are still taxes, insurance and upkeep. But the total amount of that is still lower than any monthly rental for us. Less than half of the average two bedroom apartment rental. And single family house rentals are well north of that figure. Well except if you are willing to go to some of the larger urban or inner ring suburbs, they will still be nudging the 1k mark.

Our house is not really an investment, but in this area our mortgage/insurance/tax payment is quite a bit cheaper than our rent would be for the same place.

I've owned and sold 5 houses since 1977 that I've lived in. Made decent money on each that covered most of my housing expense. My current house is paid for and it's my final move at age 67. I've over improved some things but it doesn't matter to me because I'm not intending to sell. More of a savings account than a money making investment.

quote:

Originally posted by Hay2bale:
I wonder what this thread would have looked like in 2009?

Many would be trying to figure out how to get out from under their mortgage without ruining their credit.

No

Owning is better than renting in my experience. At least when you own a house you build some equity with the money you spend on payments. Rent is gone in its entirety. I sold a house in Houston at a loss when the oil business went down the crapper in the 1980s. I felt bad about it until I figured out that I would have spent far more on rent (had I rented) over the 4 years I owned it than I lost in the short sale.

Landlords aren’t completely stupid. They factor in the cost of maintenance and repairs when they set rent prices, so a renter pays for those expenses much like a homeowner. It’s spread out over the term of the lease, though.

Rent can go up with inflation. Unless you got bilked into a balloon mortgage your payment will be the same throughout the life of the loan, in spite of the effect of inflation.

An asset would be a better description.

The house adds to my net worth. I have to live somewhere and you pay for the taxes, insurance, etc. directly with ownership or through rent.

I've been fortunate to live where prices have always risen over the long term and I haven't been forced into any untimely moves requiring a sale in a down market.

I'm old enough where I don't see myself moving many more times so maybe my luck will hold out.